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Life insurance: 5 misconceptions you probably have

Life insurance conveys many preconceived ideas: blocked money, impossibility to change beneficiary, investment that does not yield enough…Here are the 5 most common clich├ęs.

The “Swiss Army Knife” of austerity continues to gain supporters. Ownership oflife insurance in the French population reached 40.5% according to an INSEE study published last May. And with good reason, this savings product has no shortage of assets to seduce. However, he still suffers from many prejudices. The MoneyVox information page has taken stock of these preconceived ideas.

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Capital blocked for 8 years

It is often mistaken to think that the money deposited on life insurance is locked up until the 8th anniversary of the contract, this is false. Although it is a long-term investment, withdrawals and payments remain completely free and the insured can access his capital at any time.

On the other hand, the date on which these withdrawals, more commonly known as partial redemptions, affect the taxation of the capital gains received. If your bank advisor asks you to “take a date”, it is actually only in the interest of taking advantage of a more favorable taxation after 8 years.

You cannot have multiple life insurance contracts.

The law only allows possession of a single access book A, for example, or a single popular savings book per person. However, this limit does not apply to life insurance contracts. So you can open as many as you want. This allows you to separate each “project”. You can thus choose to open a life insurance policy to later transfer this contract to a beneficiary, fund a child’s studies or benefit from additional income in retirement.

It is not possible to change the beneficiary

When you take out your life insurance contract, you fill in what is called the “beneficiary clause” and designate the person or persons who will benefit from your savings if you die. By default, most savers choose the “default” clause, i.e. the spouse and then the heirs in the event of the spouse’s death. Good to know, this clause is not irrevocable, so you can change it whenever you want. It is also highly recommended if you change your family situation.

Life insurance, an investment for older people

Its name suggests that it is a simple death insurance policy that guarantees the payment of an annuity or a capital to a beneficiary at the time of the death of the contract holder. It is not like that. Also known as the “Swiss Army Knife” of savings, this multifunctional investment has many advantages.

In particular, it makes it possible to make a medium-term financial investment that offers an advantageous tax framework, but also to better prepare for retirement in anticipation of additional and regular income. This is possible thanks to several investment instruments (equity funds, real estate, etc.) which are certainly not guaranteed, but are potentially more profitable.

“The money placed in life insurance can therefore be withdrawn at retirement, before or simply not withdrawn for the purpose of an inheritance”, sums up MoneyVox.

Life insurance is not profitable

While the average return on Euro funds reached 1.28% in 2021, it fails to compete with those on regulated savings accounts, which were recently revalued in August. However, it may well go up to 2% for the year 2022, just like the Livret A account. agree to dip into their reserves to earn a better return on life insurance.

Life insurance, however, gives access to other media than the classic but reassuring funds in euros. If the units of account do not display a capital guarantee, the return prospects are more attractive.

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